Interest rates to stay low until at least end 2010

inspector_monkfish

dazzaofdagenham wrote: »

is today ( thursday ) Decision day on the BoE interest rates ?

Hope they keep it the same....

darren

yes.
12.00

inspector_monkfish

Heyman wrote: »

Do you think, after the election, that Labour will raise interest rates in the US, Europe and other countries where rates are at an all time low?

I think you have to take more of a world view on this - ultra-low rates are not just in the domain of the UK.

The govenment don't decide on rates. The Bank of England do.

RufusA

inspector_monkfish wrote: »

The govenment don't decide on rates. The Bank of England do.

However the Government do set the inflation target.

I'd also be suprised if Darling didn't have the odd friendly chat with King as to how much credence should be paid to inflation targeting over and above other more politically sensitive factors.

I'm sure that prior to an election the Government wouldn't want to impress on the populace that sky high unemployment was a price worth paying to keep inflation on target.

Rufus.

inspector_monkfish

RufusA wrote: »

However the Government do set the inflation target.

I'd also be suprised if Darling didn't have the odd friendly chat with King as to how much credence should be paid to inflation targeting over and above other more politically sensitive factors.

I'm sure that prior to an election the Government wouldn't want to impress on the populace that sky high unemployment was a price worth paying to keep inflation on target.

Rufus.

well i have no doubt they all have a cosy little chat over a pot of tea and some custard creams, but at the end of the day its the MPC at the BOE that vote on the final decision.

diable

In Sweden they dropped the rate to - 0.25% to force the banks to start lending, maybe that would be a good idea if it happened here for people who want a decent rate on a new mortgage but alas not for savers though.

inspector_monkfish

diable wrote: »

In Sweden they dropped the rate to - 0.25% to force the banks to start lending, maybe that would be a good idea if it happened here for people who want a decent rate on a new mortgage but alas not for savers though.

that is a bit of a misconception

sweden only dropped the rate which the central bank pays to banks that deposit money with them, to -0.25% (we are talking billions of krona here)

they left the base rate at +0.25%, unchanged


BOE could do the same thing here
currently our base rate is 0.50%, and the rate which BOE pay Banks to deposit with them is also 0.50% - this is the rate that is more likely to be cut, not your everyday base rate they we all know and love (although you cannot rule it out!!;))

currently there is about 140bn quid of banks cash parked at boe, getting 0.50% daily interest, but doing nothing ! BOE would like to encourage banks to park that somewhere else, like small businesses etc.... to get the economy moving...

dazzaofdagenham

keeping the rate at .5% would be great for another six months..

Then i will be debt free ( excluding mortgage )

Happy days

darren

steve237

Interest rates held at 0.5% for 6th month in a row.

inspector_monkfish

12:00 10Sep09 -BANK OF ENGLAND MAINTAINS BANK RATE AT 0.5 PCT
12:01 10Sep09 -BoE keeps rates unchanged, 175 bln stg QE in place

LONDON, Sept 10 - The Bank of England left
interest rates at a record low of 0.5 percent for the sixth
month running on Thursday and said it would keep its 175 billion
pound asset buying programme in place.

Most analysts had predicted status quo after last month's
shock decision to raise the amount of money the BoE is printing
to support the economy -- quantitative easing -- by 50 billion
pounds.

But some strategists had seen an outside chance it would
either lift the total again -- Governor Mervyn King had wanted
even more QE last month -- or cut the interest rate it pays
banks holding reserves with it, to encourage them to lend rather
than park money at the central bank.

The economic newsflow has been a bit brighter since the
BoE's last meeting -- house prices jumped another 0.8 percent
last month, according to the Halifax index on Thursday -- and
the FTSE-100 index of leading shares is above 5,000 for the
first time in 11 months.

Policymakers remain concerned, however, about the durability
of any recovery after Britain's deepest downturn in decades.

Output in the second quarter of this year was 5.5 percent
lower than a year ago and most commentators are predicting only
slow growth through 2010 with unemployment rising for some time
to come.

brit1234

Bad news for a lot of us saving our deposits. Low intererst rates caused this credit crunch, lowering rates further just stores bigger problems for the future.

If people can't afford intererst rates at 5% then they are highly overstretched with overvalued property.